Intel Report Core Replacement - Flipbook - Page 17
THE MIDDLE PATH: HOW BANKS USE SPLIT CORES
When First Horizon closed on its purchase of
core (the latter will soon transition to First Horizon’s core).
IBERIABANK in July 2020, included in the merger was a
VirtualBank offers consumers basic banking services, like
consumer-facing digital institution called VirtualBank. Prior
mobile banking, bill pay and external transfers, but it will
to the merger, First Horizon had looked at several new core
also add new services and API-led features. Designing
providers, which had intrigued the organization. But the $88
and implementing them on the alternative core is eased by
billion asset bank had too complex of a service offering to
“orders of magnitude,” says Tyler Craft, senior vice presi-
replace its entire core with unproven tools. The merger, howev-
dent and head of VirtualBank. “The way someone designed
er, provided a chance to test and learn about the solutions.
a mainframe 30 years ago isn’t dictating what we’re doing
In July 2021, First Horizon completed a core replacement
today.”
for VirtualBank, moving the digital institution to Finxact.
A significant goal of deciding to replace this portion of First
It separated the core of the VirtualBank from IBERIA’s
Horizon’s core? To learn.
VIRTUALBANK
FIRST HORIZON
IBERIABANK
FIRST HORIZON
VIRTUALBANK
IBERIABANK
IBERIABANK + VIRTUALBANK
FIRST HORIZON
Evolution of a split-core
1. First Horizon buys
2. VirtualBank gets spun
3. The rest of IBERIA’s
4. When finalized, two
IBERIABANK
off into a new core.
core moves to
cores exist: First Horizon’s
First Horizon’s core.
and VirtualBank’s.
Most bank CEOs have a “mortal fear” of a full conversion, says Grottke. These new providers,
which offer ways for banks to test new cores and solutions without replacing the entire core,
provide a “highly attractive approach” to leaders, he adds.
“It’s referred to as a de-risking strategy,” says Brad Smith, a partner at Cornerstone
Advisers. That’s because it offers some solutions that banks like, without having to navigate a
full conversion, including:
1. Easier set-up. Banks gain access to a core solution that can more easily integrate new
services or banking apps. This gives a bank the ability to offer online mortgage loan applica-
CORE REPLACEMENT: HOW BANKS ARE REPLACING THEIR CORES | 15